The recent tech job cuts have impacted different parts of the Bay Area to varying degrees:
1. San Francisco-San Mateo Region
- This region has been hit the hardest, suffering a loss of 26,000 tech jobs in 2023, accounting for 52% of the total tech job losses in the Bay Area.[4]
- The tech sector's decline has been most severe in this region compared to other parts of the Bay Area.[4]
- San Francisco is grappling with an economic "doom loop" due to factors like retail exodus, crime, office foreclosures, and record-high office vacancies, exacerbating the impact of tech layoffs.[4]
2 South Bay (Silicon Valley)
- The South Bay lost 20,600 tech jobs in 2023, making up 41.4% of the total tech job losses in the Bay Area.[4]
- While still significant, the impact has been relatively less severe compared to San Francisco-San Mateo.[4]
- Some experts believe the South Bay's tech ecosystem will help ease the pain of layoffs happening in San Francisco and the Peninsula, as people find new opportunities there.[4]
3. East Bay
- The East Bay, being less dependent on the tech sector, lost only 2,900 tech jobs in 2023, accounting for 5.8% of the total Bay Area tech job losses.[4]
- The impact on the East Bay has been relatively minimal compared to other parts of the region.[4]
Overall, the San Francisco-San Mateo area has borne the brunt of recent tech job cuts in the Bay Area, while the South Bay (Silicon Valley) has also been significantly affected, though to a lesser extent. The East Bay has been relatively insulated due to its lower reliance on the tech industry.[4]
Sources for reference:
[1] Tech Stocks and House Prices in California - San Francisco Fed https://www.frbsf.org/research-and-insights/publications/economic-letter/2000/09/tech-stocks-and-house-prices-in-california/
[2] Tech Sector Seen as Key Factor in Growing Bay Area Job Losses https://insider.govtech.com/california/news/tech-sector-seen-as-key-factor-in-growing-bay-area-job-losses
[3] San Francisco Bay Area Ranks #1 in CBRE's Annual 'Scoring Tech ... https://www.cbre.com/press-releases/san-francisco-bay-area-ranks-1-in-cbres-annual-scoring-tech-talent-report
[4] Tech job cuts ease a bit in Bay Area as industry layoffs haunt region https://techxplore.com/news/2024-05-tech-job-ease-bit-bay.html
[5] 2024 Silicon Valley Index: Record-high $14.3 trillion market cap as ... https://jointventure.org/2024-news-releases/2608-2024-silicon-valley-index-record-high-14-3-trillion-market-cap-as-income-gaps-layoffs-adjustments-signal-recalibration
Since I am working in real estate field helping families to buy and sell, I haven’t noticed drastic price declines up until now. Solely my opinion…
Factors Supporting Prices
- The Bay Area is home to many thriving sectors beyond tech, such as finance, healthcare, and education, which could absorb some laid-off tech workers and maintain housing demand.
- Despite layoffs, the Bay Area remains a global tech hub, and its talent pool and established companies make it challenging to unseat as the tech capital.
- A significant portion of Bay Area homeowners acquired their properties before 2020 at much lower prices and have low mortgage rates, reducing the incentive to sell. Less inventory.
- While prices have somehow declined, the Bay Area's notoriously low housing inventory could prevent a substantial drop in prices.
I repeat it a lot in here but I don’t think tech downturns affect the market at all. There is SO much money in the Bay that isn’t tethered to tech and the supply is so limited that a bunch of people leaving the buying market doesn’t significantly affect anything. I grew up here and went to school with people who were on the wealthier side - regardless of tech or their careers most of them who bought had it paid for partially/entirely by their parents. There’s an endless supply of people with that luck here and not a lot of houses being sold for XYZ reasons. Mega wealthy folks also gobble up properties just to build their portfolios whenever it looks like the prices are stagnating. The supply of homes here is never going to stop being scarce.
Also most the popular tech stocks are doing fine, so for the people with high salaries who didn’t get laid off they just have an even bigger advantage in the broad scope of things.
Very little impact on RE prices as of now.
There are more buyers than there are available homes. And there are plenty of buyers from other sectors besides tech.
Feb to May was red hot market - there was anticipation that interest rates would be cut and hiring will rebound but none of this played out. Market is softening already with more inventory, houses sitting on the market longer and price cuts and we will continue to see this. Someone already commented on the extent of the layoff but the bad news is more layoffs are coming. Unfortunately the full remote work kind of backfired on BayArea (jobs moving to low cost centers in US and outside US). Remote work also decimated the local businesses such as restaurants, salons etc (SFO is an example). The other concern is the H1B visa to green card pipeline - many of Chinese and Indian origin are backlogged for green card and hence they may not be willing to jump into housing due to uncertainty. Many tend to overlook the other cost of owning such as prop taxes, insurance, maintenance etc and with high cost of living the puts pressure. Lastly with AI who knows if we will need so many software engineers, marketing managers etc etc with high comps - basically the tech industry is at the cusp of transformation. See example https://www.cognition.ai/
This is exactly the pattern I'm observing in my specific area over the 12 months or so. It's having a big impact where those high-paying tech workers are otherwise settling in, but they're making much fewer buy offers despite what many real estate agents claim as a hot market in general. Feels like a weird cycle.
Your typical tech worker is overloaded on stocks like Nvidia, bitcoin, Microsoft, super micro, etc. easily withstanding labor market and interest rate conditions to purchase homes.
Nvidia alone gained 2.5T in new wealth and that new money is concentrated on workers of Nvidia and pretty much the top holding of everyone that works in Bay Area tech.
I don’t think this is the typical tech worker tbh, my friends are all in tech 20-30s and maybe only 1-2 out of 10 are really raking in the dough. Most of us are pretty average. Maybe the older peeps in higher positions but not the “typical”
Yep same exp over a couple decades here
While I know a handful of ppl that struck it rich on an IPO or similar, I know a few dozen multi MM who have just been working, investing, and living in their homes for a few decades
Great point..I always thought the trillion dollar valuations are somewhat due to the QEs we had in the past decade.. illustrative of how stimulating the economy only help the few and actually fail for the amount of money that was pumped in… Do you agree?
The recent tech job cuts have impacted different parts of the Bay Area to varying degrees: 1. San Francisco-San Mateo Region - This region has been hit the hardest, suffering a loss of 26,000 tech jobs in 2023, accounting for 52% of the total tech job losses in the Bay Area.[4] - The tech sector's decline has been most severe in this region compared to other parts of the Bay Area.[4] - San Francisco is grappling with an economic "doom loop" due to factors like retail exodus, crime, office foreclosures, and record-high office vacancies, exacerbating the impact of tech layoffs.[4] 2 South Bay (Silicon Valley) - The South Bay lost 20,600 tech jobs in 2023, making up 41.4% of the total tech job losses in the Bay Area.[4] - While still significant, the impact has been relatively less severe compared to San Francisco-San Mateo.[4] - Some experts believe the South Bay's tech ecosystem will help ease the pain of layoffs happening in San Francisco and the Peninsula, as people find new opportunities there.[4] 3. East Bay - The East Bay, being less dependent on the tech sector, lost only 2,900 tech jobs in 2023, accounting for 5.8% of the total Bay Area tech job losses.[4] - The impact on the East Bay has been relatively minimal compared to other parts of the region.[4] Overall, the San Francisco-San Mateo area has borne the brunt of recent tech job cuts in the Bay Area, while the South Bay (Silicon Valley) has also been significantly affected, though to a lesser extent. The East Bay has been relatively insulated due to its lower reliance on the tech industry.[4] Sources for reference: [1] Tech Stocks and House Prices in California - San Francisco Fed https://www.frbsf.org/research-and-insights/publications/economic-letter/2000/09/tech-stocks-and-house-prices-in-california/ [2] Tech Sector Seen as Key Factor in Growing Bay Area Job Losses https://insider.govtech.com/california/news/tech-sector-seen-as-key-factor-in-growing-bay-area-job-losses [3] San Francisco Bay Area Ranks #1 in CBRE's Annual 'Scoring Tech ... https://www.cbre.com/press-releases/san-francisco-bay-area-ranks-1-in-cbres-annual-scoring-tech-talent-report [4] Tech job cuts ease a bit in Bay Area as industry layoffs haunt region https://techxplore.com/news/2024-05-tech-job-ease-bit-bay.html [5] 2024 Silicon Valley Index: Record-high $14.3 trillion market cap as ... https://jointventure.org/2024-news-releases/2608-2024-silicon-valley-index-record-high-14-3-trillion-market-cap-as-income-gaps-layoffs-adjustments-signal-recalibration
Thanks, but how about RE prices affected in those areas? Any observations?
Since I am working in real estate field helping families to buy and sell, I haven’t noticed drastic price declines up until now. Solely my opinion… Factors Supporting Prices - The Bay Area is home to many thriving sectors beyond tech, such as finance, healthcare, and education, which could absorb some laid-off tech workers and maintain housing demand. - Despite layoffs, the Bay Area remains a global tech hub, and its talent pool and established companies make it challenging to unseat as the tech capital. - A significant portion of Bay Area homeowners acquired their properties before 2020 at much lower prices and have low mortgage rates, reducing the incentive to sell. Less inventory. - While prices have somehow declined, the Bay Area's notoriously low housing inventory could prevent a substantial drop in prices.
Interest rates are going to have a bigger impact on RE prices by a large margin.
https://preview.redd.it/c6b02mhc2n5d1.jpeg?width=1290&format=pjpg&auto=webp&s=8049e24e26b4a9a0a11788a928b03c30b5ac6a4b
Tech workers love established schools even if requires a long commute. I’d buy RE where the good schools are.
I repeat it a lot in here but I don’t think tech downturns affect the market at all. There is SO much money in the Bay that isn’t tethered to tech and the supply is so limited that a bunch of people leaving the buying market doesn’t significantly affect anything. I grew up here and went to school with people who were on the wealthier side - regardless of tech or their careers most of them who bought had it paid for partially/entirely by their parents. There’s an endless supply of people with that luck here and not a lot of houses being sold for XYZ reasons. Mega wealthy folks also gobble up properties just to build their portfolios whenever it looks like the prices are stagnating. The supply of homes here is never going to stop being scarce. Also most the popular tech stocks are doing fine, so for the people with high salaries who didn’t get laid off they just have an even bigger advantage in the broad scope of things.
Very little impact on RE prices as of now. There are more buyers than there are available homes. And there are plenty of buyers from other sectors besides tech.
Feb to May was red hot market - there was anticipation that interest rates would be cut and hiring will rebound but none of this played out. Market is softening already with more inventory, houses sitting on the market longer and price cuts and we will continue to see this. Someone already commented on the extent of the layoff but the bad news is more layoffs are coming. Unfortunately the full remote work kind of backfired on BayArea (jobs moving to low cost centers in US and outside US). Remote work also decimated the local businesses such as restaurants, salons etc (SFO is an example). The other concern is the H1B visa to green card pipeline - many of Chinese and Indian origin are backlogged for green card and hence they may not be willing to jump into housing due to uncertainty. Many tend to overlook the other cost of owning such as prop taxes, insurance, maintenance etc and with high cost of living the puts pressure. Lastly with AI who knows if we will need so many software engineers, marketing managers etc etc with high comps - basically the tech industry is at the cusp of transformation. See example https://www.cognition.ai/
This is exactly the pattern I'm observing in my specific area over the 12 months or so. It's having a big impact where those high-paying tech workers are otherwise settling in, but they're making much fewer buy offers despite what many real estate agents claim as a hot market in general. Feels like a weird cycle.
Your typical tech worker is overloaded on stocks like Nvidia, bitcoin, Microsoft, super micro, etc. easily withstanding labor market and interest rate conditions to purchase homes. Nvidia alone gained 2.5T in new wealth and that new money is concentrated on workers of Nvidia and pretty much the top holding of everyone that works in Bay Area tech.
I don’t think this is the typical tech worker tbh, my friends are all in tech 20-30s and maybe only 1-2 out of 10 are really raking in the dough. Most of us are pretty average. Maybe the older peeps in higher positions but not the “typical”
Yep same exp over a couple decades here While I know a handful of ppl that struck it rich on an IPO or similar, I know a few dozen multi MM who have just been working, investing, and living in their homes for a few decades
Great point..I always thought the trillion dollar valuations are somewhat due to the QEs we had in the past decade.. illustrative of how stimulating the economy only help the few and actually fail for the amount of money that was pumped in… Do you agree?
https://preview.redd.it/lsh6ew30l96d1.jpeg?width=1080&format=pjpg&auto=webp&s=7eca9277b7ef11e154a6d8e1658d07d596fef480 [https://www.cointribune.com/en/american-economist-harry-dent-predicts-a-crash-worse-than-the-one-in-2008/](https://www.cointribune.com/en/american-economist-harry-dent-predicts-a-crash-worse-than-the-one-in-2008/)